Theme on the Environment, Macroeconomics, Trade and Investment (TEMTI)

Objectives

TEMTI is a working group of the Commission for Environmental, Economic and Social Policies (CEESP). Its core mandate is to provide practical and enabling information, as well as relevant policy options on issues lying at the intersection between economics and environmental and social sustainability. The main objective is to enhance and maintain the capacity of CEESP’s members and of the entire Union to address matters related to economic issues and policies that affect sustainability at the local, national and international levels.

TEMTI is a network of specialists involved in rigorous research and debates in a quest for greater economic justice and environmental responsibility. TEMTI is a group where plurality of views is welcome. Its work is based on rigorous analyses of the dynamics and structure of the world economy. We believe that without understanding the configuration and underlying forces that drive the global economy it will be impossible to advance towards a consistent set of policies capable of leading to worldwide sustainability. It is important therefore to work with real world economic data and accurate analytical tools that enhance our capacity to diagnose and recommend robust policy changes. This includes promoting the study of hitherto neglected themes, such as the impact of macroeconomics or the role of monetary variables and the financial sector in the process of environmental degradation and social disparities. TEMTI is an open space for critical thinking about old paradigms and new lines of research and policymaking.

TEMTI evolved from a previous cluster focused primarily on issues of trade and the environment. We have expanded this to cover macroeconomic policies, as well as sector level policies (agriculture, industry) and horizontal or cross-sector policies (energy, science and technology). In accordance with CEESP’s vision and mandate, TEMTI conceives long-term sustainability as involving not only conserving ecosystems’ integrity, but also social responsibility and justice.

TEMTI has thirty five members. They are based in Africa, Asia, Latin America, North America and Europe.

Overview and Mission Statement

In a relatively short period of time, economic forces have led our planet to the brink of large-scale ecological disaster. Perhaps the most serious aspect of this crisis is the acceleration in the rate of biodiversity loss due to the loss of land, coastal and marine habitats. Illegal trade and traffic of wildlife is another powerful driver of the extinction of species. Change in global mean temperatures will have serious effects on ocean levels, rain and weather patterns and on the generation of extreme weather events. Finally, the capacity of the majority of the world’s ecosystems to provide environmental services has been seriously degraded. Many of these environmental services are critical for human welfare, as well as for the dynamic stability of the biosphere. Depletion of aquifers, soil erosion, deforestation and the loss of genetic resources pose a dangerous set of challenges to humankind. This environmental deterioration increases the probability of producing abrupt and potentially irreversible changes in ecosystems with deleterious consequences for human beings.

The world is not only threatened by environmental degradation. Even before the current global crisis erupted it was easy to see that the neoliberal model was associated with a deficient economic performance: growth rates between 1975-2010 decreased in comparison with rates in the period 1945-1975. Inequality in income distribution increased in almost every important capitalist economy with serious consequences in terms of household indebtedness. According to international development agencies, more than half of the world’s population (approximately three billion people) lives in or under the poverty line. It is clear that the Millennium Development Goals will not be attained, especially the ones related to poverty, hunger and health. Between 1988 and 2012 the world has experienced dozens of severe financial crisis that were followed by severe adjustment processes bringing hardship for millions. Frequently this adjustment process was accompanied by extraordinary bailouts for large banks and the corporate sector as public expenditures were curtailed in vital sectors (such as health and education, as well as the environment). As a result, the social tissue of communities was degraded and livelihoods were destroyed in rural areas, affecting the capacity of communities for environmental stewardship.

Today the world is engulfed in the worst economic and financial crisis in eight decades. This crisis is not the result of a case of “market failure” or of “asymmetric information” in the real estate and financial sectors of the US economy. It is the consequence of deep and very powerful macroeconomic forces that helped shape the world economy of the beginning of the twenty-first century. These forces correspond to a paradigm in economic thought (neoliberalism) that relies on the notion that free competitive markets allocate resources efficiently and that the guidance of development strategies should be left to the private sector. The global economy that resulted from the application of this paradigm is a profoundly distorted system marked by three critical features. First, the opulence of a tiny majority contrasts with the poverty of billions and a small number of giant corporations concentrates immense economic power. This is probably the most brutal aspect of the world economy today and puts enormous pressure on environmental sustainability. Second, huge international economic imbalances continue to accumulate in a process that endangers the world economy. These imbalances between countries with massive current account surpluses and those with chronic external deficits have a negative effect on aggregate demand (that is, on productive investment and consumption). Today the world economy lacks the required adjustment mechanisms to redress these trade imbalances. Third, the expansion of the financial sector overshadows every other component of the global economy. Capital flows and currency speculation, not to mention the huge market of derivatives and other financial instruments, have distorting effects on many aspects of the economy, including food and commodity prices. The financial sector has succeeded in subjecting macroeconomic policy priorities to the interests and needs of finance.

It is clear that changes in this policy and institutional framework need to be considered as a top priority for sustainability. The current state of affairs constitutes a dangerous situation that threatens mankind’s capacity to engage in a trajectory for sustainability.

 

Priority Areas for TEMTI

TEMTI members are working in several priority areas, developing new projects and carrying out policy-oriented research. A few examples of these priority areas are the following.

I. Macroeconomic policies for sustainability. Macroeconomic policies have an impact on rates of economic activity, as well as income distribution and production strategies of all economic agents. Key sectors for social sustainability (health, education, housing) depend on macroeconomic policies that also determine the amount of resources allocated to environmentally sensitive sectors, such as sustainable agriculture and protected areas. Macroeconomic policies need to be redefined as a function of sustainability objectives and not the other way around.

II. Sustainable Agriculture, Agro-biodiversity and Conservation Policies. The relation between agricultural and conservation policies has not received the attention it deserves. Establishing protected areas (regardless of the governance scheme) in the context of inadequate agricultural policies compromises the long-term viability of conservation objectives. Sustainable agriculture and agro-ecology may play a critical role for poverty reduction as well as biodiversity conservation if the appropriate agricultural policies are implemented.

III. Climate Change Economics. The multilateral regime for climate change has been unable to establish a regulatory framework to reduce global emissions of greenhouse gases and a set of tools to make it effective. As a result, the challenges for mitigation and adaptation have multiplied. There is evidence that emissions’ trading is simply not working (the EU-ETS has not been able to reduce emissions, price decline while showing greater volatility and the scheme may be contributing to lock-in of fossil fuels). Moving towards a low-carbon economy requires getting the economics of climate change right.

IV. Trade in Endangered Species. International commerce of wildlife, whether endangered or threatened, has become in the last decades one of the most important forces driving loss of biodiversity (and even of species’ extinctions). As the Convention for International Trade in Endangered Species of Wild Fauna and Flora (CITES) celebrates its fortieth anniversary a new hard look at various policy options is required. Pressure to legalise markets (especially strong in the case of emblematic species with high commercial value) needs to be accompanied by rigorous analyses of market structure in order to ensure that the right policies deliver the correct answers.

V. Finance and the Commodification of Nature. The expansion of the financial sector had enormous implications for the world economy. Profitability levels associated with arbitraging and purely speculative investments have distorted investment patterns and today the global financial system has almost no relation with the real economy. Already before the crisis the search for superior profitability led to the creation of special markets in carbon emissions. Today other markets in nature are being developed (e.g., water, land, forests, species, habitats and biodiversity offsets). The policy response to the global financial crisis injected additional sums of liquidity into the banking and non-banking system, with a huge de-stabilizing potential. The creation of new markets as a response to protect nature is leading to the formation of new commodities with dire economic and social consequences (for example in food prices), as well as for the environment. This is an area that demands close attention.

Projects and on-going work

Frank Ackerman (with Elizabeth Stanton) published a new book Climate Economics: the state of the art (London, Routledge). In this new book the authors consider the fact that although the opportunity to avert all climate damage has now passed, well-designed mitigation and adaptation policies, if adopted quickly, could still greatly reduce the likelihood of the most tragic and far-reaching impacts of climate change. Getting climate economics right is about helping solve the dilemma of the century. Better approaches to climate economics will allow economists to be part of the solution rather than part of the problem. This book analyses potential paths for improvement. Frank Ackerman became a member of TEMTI in 2011.

Godfrey Kayenze (together with Timothy Kondo, Prosper Chitambara and Jos Martens) published a new book, Beyond the Enclave. Towards a Pro-Poor and Inclusive Development Strategy for Zimbabwe (Harare, LEDRIZ). This book argues for a new approach to development in Zimbabwe based on pro-poor and inclusive strategies which will contribute to well-being of all of its citizens and wise stewardship of its natural environment and resources. Godfrey Kayenze joined TEMTI in 2010.

Reverend Awala Longkummer is involved in interfaith peace building activities with the Interfaith Coalition for Peace India as regional coordinator. She also coordinated the ten-day Peace Training Program in Chiang Mai, Thailand, in November 2012. The program covers human rights issues, indigenous women and leadership development, as well as peace building activities. One central aspect of her work pertains to income and resource distribution. Reverend Longkummer’s activities on access and control of natural resources in the North East Territories are central to our work on economic justice and human conflict.

Aseem Shrivastava and Ashish Kothari published their new book Churning the Earth: the Making of Global India (New Delhi, Penguin Viking). This analysis examines India’s rise as a major player in the world economy and contrasts this with the consequences for the people and environment of this country. The book presents incontrovertible evidence of the fact that the growth process in India has been of a predatory nature and questions its political and ecological sustainability.

Herbert Jauch and Deprose Muchena are editors of the book Tearing Us Apart: Inequalities in Southern Africa (Johannesburg and Windhoek: OSISA and LARRI). This important book contains five country level studies on the dynamics and evolution of inequality (Angola, Malawi, Namibia, South Africa and Zimbabwe). The analysis in each case culminates with specific policy proposals to revert these negative trends and establish a new developmental platform, one that moves away from neoliberal market fundamentalism and in which the state will be able to play a key role. Messrs Jauch and Muchena became members of TEMTI in 2010. If you are looking for further information on Namibia (and sometimes Africa) regarding labour and development issues, you can access Herbert's papers on www.vivaworkers.org.

Sergio Schlesinger published his latest research report Brazilian International Cooperation and Investments: The Internationalization of Ethanol and Biodiesel (FASE with the support of OXFAM, Rio de Janeiro, 2012). This thorough investigation shows that Africa occupies the centre of attention of Brazilian policy of investing in agro-fuels production in other countries. It also demonstrates that Brazilian initiatives in Africa (particularly in Angola and Mozambique) are part of a strategy aiming to put Brazil as the global leader of agro-fuels production using African countries as partners in this leverage that requires turning ethanol and bio-diesel into commodities. The report can be read here. Mr. Schlesinger was responsible for the study of Brazil’s macroeconomic policies and their impact on the environment now published in Policy Matters 18 (downloadable here).

Reverend Malcolm Damon took part in the Seminar of the Finnish Evangelical Mission on Food Security in Seinajoki, Finland in October 2012. In his presentation Mr. Damon explained that about one hundred million children under the age of five are underweight and this means they cannot grow sufficiently: these kids are already disadvantaged before they have even started to participate in life. Reverend Damon is the Executive Director of Economic Justice Network (www.ejn.org.za). His speech can be read here.

Steve Suppan from the Institute for Agriculture and Trade Policy (IATP) addressed an open letter to the finance ministers of the G20 calling for leadership in financial reform on the occasion of their November 2011 meeting. This important letter stresses the need for new and bold regulatory initiatives to deal with standardized so-called over-the-counter derivatives. These instruments have had a major impact on the volatility of commodity prices. The text of this letter can be found here. Dr. Steve Suppan joined TEMTI in mid-2012

Timothy A. Wise has focused his research on the ongoing food price crisis and how it is affecting developing countries. Following his co-authored 2012 report, “Resolving the Food Crisis: Assessing Global Policy Reforms Since 2007”, he has published on US corn ethanol and its contributions to high food prices. He has also written on Mexico's ongoing import dependence in maize and the government's misguided strategies to address it, rather than investing in sustainable smallholder production. He is currently working on an assessment of the economic modeling behind the dire predictions that we will be unable to feed the world in 2050. He is also leading a research project for India's Research Information Systems Institute on global agricultural policies, with his own contribution focused on the damaging interdependence of food, fuel, and financial markets. In addition: He is dismayed at the Red Sox prospects this season, but he takes heart from what his Mexican colleagues have taught him from their many years of experience - it is less important how well you yourself do than it is that the Yankees do worse. And this year they may.

Alejandro Nadal authored a book on Rethinking Macroeconomics for Sustainability (London, Zed Books). This book examines how macroeconomic policy priorities can be redefined in order to attain the overall objective of sustainability. It covers the evolution of macroeconomic theory and practice in the last eight decades and then considers the changes that are required from a perspective of climate change and the so-called green economy. The book examines financial, monetary and fiscal policies. It also contains a chapter on the changes that are needed in international macroeconomics. Mr. Nadal is also the guest editor of Policy Matters 18, a special issue of CEESP’s flagship publication dedicated to the findings of an international research project on ‘Macroeconomic Policies, Sustainability and Livelihoods’. This publication contains case studies for Argentina, Brazil, Ecuador, Costa Rica and Mexico, as well as two chapters on India. Policy Matters 18 was launched in New Delhi by IUCN Executive Director Julia Marton-Lefevre and Dr. Aroha Mead, CEESP’s chair on November 2010. The project for the five Latin American countries was supported by the special 3IC Fund of IUCN. The entire report or its individual chapters can be downloaded here.

 

Alejandro Nadal

Contact

Alejandro Nadal, Chair

Bio

El Colegio de México
Tel (52.55) 5659.8203 and 5554.9764
Mobile (521.55) 2653.5138
E-mail sirius.iceberg@gmail.com and anadal@colmex.mx

Economic Perspectives on Global Sustainability

A NEW TEMTI SERIES

TEMTI announces the launching of a new and exciting series, Economic Perspectives on Global Sustainability. This innovative series is designed to provide reliable information and rigorous analysis on the human dimensions of environmental change. Its main objective is to open a much-needed space for reflection and understanding of the complex forces that are driving social inequality and environmental degradation worldwide.

Contributions to the series will come from research carried out by TEMTI’s network of experts. Economic Perspectives on Global Sustainability aims to strengthen communication and collaboration between the different communities of the International Union for the Conservation of Nature, as well as within its worldwide constituency.

The series spans a wide range of topics pertaining to global sustainability. These include the relation between markets and economic policies, financial speculation and commodity prices, implications of the global economic crisis, macroeconomics and climate change policies, extractive industries, sustainable agriculture and conservation policies, trade in endangered species, large commercial logging in tropical rainforests, biofuels and food prices, etc. The series will also help identify emerging fields of interest and action.

Economic Perspectives on Global Sustainability will appear monthly. All papers in the series are available for downloading below this section on the page.

TEMTI's Economic Perspectives on Global Sustainability Papers
Francisco Aguayo - CEESP TEMTI

Series Editor

Francisco Aguayo

(+5255) 5541 0146
francisco.aguayo.ayala@gmail.com

Francisco Aguayo (Mexico City, 1972) is an independent consultant. He studied economics at the National Autonomous University of Mexico and is a PhD Fellow at the Maastricht Economic and Social Research and Training Centre on Innovation and Technology (UNU-MERIT) in Maastricht, the Netherlands. His research focuses on innovation, industrial organization, energy, and sustainability. He collaborated as leading author in Chapters 24 and 25 of the Global Energy Assessment (Cambridge University Press, 2012).
 

TEMTI Documents and Presentations Useful Link